Real-term public sector pay falls are fuelling the recent strikes… but what lies ahead?

Across the past year, 3.9 million working days have been lost to industrial action– more days than at any point since the 1980s. The Resolution Foundation’s Labour Market Outlook, published today, takes a look at why these strikes are happening… and, crucially, at what’s happening to public sector pay, and how this has fuelled the ongoing strike action.

Firstly, to put things into context, it’s worth making it clear how the recently elevated levels of industrial action fit in with the historical picture. Compared to the 1970s/80s, we’re hardly seeing any strikes: many years in those decades had eight to nine times more days lost to strike action than we’re seeing now, with this partly due to the fact that about twice as many workers were in a union then.

That said, in the modern era of lower union membership (22 per cent of workers were in a union in 2022, compared to 39 per cent in 1989), 3.9 million days in a year is a lot: it’s about nine times more than the average yearly number in the 2010s (450,000). So what’s driving the strikes?

The answer is that strikes are happening firstly in sectors in which unions are still strong, and, secondly, in sectors where the pay pain has been happening. Recent industrial action has overwhelmingly been concentrated among sectors that are unionised: mainly the public sector (health, education and public administration), and the postal services and railways, both of which used to be part of the public sector.

And while high inflation meant that average weekly pay for all workers fell in the past two years, the hit has been especially severe for public sector workers, who have seen real-terms pay falls of 9.2 per cent over this period (compared to a fall of 2.9 per cent in the private sector).

It’s worth noting, however, that the (broad) industry that has done worst in pay terms over the past two years is actually ‘personal services’, which part of the private sector. But because union membership in this sector is low, it has seen almost no strike action at all.

It’s also worth noting that the strikes haven’t just been sparked by the recent cost of living crisis. The context of the last 10 years matters too: during this period, we’ve seen public sector pay losing ground relative to private sector pay, as the chart below shows.

We’ve also seen an increase in job-related exhaustion and stress in the public sector, with data from the Skills and Employment Survey showing that, in 2017 (the most recent data available), the proportion of public sector workers who said they were were always or often ‘coming home exhausted’ stood at 57 per cent (although 48 per cent of private sector workers also reported feeling this way, pointing to wider problems with job quality and working conditions across the UK).

The recent pay squeeze in the public sector also appears to have contributed to a larger relative increase in vacancies in the public sector: while the vacancy rate is normally higher in the private sector, vacancy rates are now equal after a faster increase in public sector vacancies post-Covid.

This acts as a reminder that, in the long run, pay and conditions in the public sector can’t drift too far apart from those in the private sector – if they do, then it becomes increasing difficult for the public sector to attract workers.

Looking forwards, we have likely passed the high watermark of strike action, with education unions accepting the Government’s recent 6.5 per cent offer, and pay looking likely to start growing again in real terms later this year.